HTC's new smartphone fails to excite analysts

10/25/2015 03:43 PM
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Photo courtesy of HTC.
Photo courtesy of HTC.

Taipei, Oct. 25 (CNA) A U.S.-based brokerage said it remains cautious about HTC Corp. (宏達電) shares and maintained its "underweight" rating despite the Taiwan company recently releasing its new smartphone, the One A9.

Unveiled in New York on Oct. 20, the HTC One A9 features a 5-inch full-HD AMOLED display, a Qualcomm Snapdragon 617 octa-core 64-bit processor, 13-megapixel rear camera, 16GB or 32GB of internal storage, and runs on Google Inc.'s latest Android 6.0 Marshmallow operating system.

The metal-clad HTC device, which looks much the same as Apple Inc.'s iPhone 6S, will be available in the U.S. next month at a promotional price of US$399.99 for a 32GB model.

"We tend to believe a decent device is not enough to reverse a company's fortune given the trend of commoditization for Android-based smartphones, industry growth deceleration and severe competition," the brokerage (whose name cannot be reported under Taiwan's regulations) said in a note to clients dated Oct. 21.

"At US$399.99, HTC One A9 seems competitively priced. However, we think a decent device without much differentiation might not be enough to regain market share and lift profits in the face of severe competition," the brokerage said.

In the U.S., Apple's new upgrade plan for iPhones is likely to gradually shorten its product replacement cycle and enhance stickiness for users of Apple's iOS operating system. This should strengthen the company's competitive edge over rivals that lack strong branding, retail infrastructure and a solid balance sheet, according to the brokerage.

In emerging markets, HTC's One A9 could find difficulty competing with brands such as Xiaomi and Huawei that offer high performance at low prices, especially given HTC's shrinking scale and lack of online channels, the U.S. brokerage said.

It added that HTC's Vive virtual reality (VR) headset is "more of a sentiment catalyst," given its initially small volumes and limited contribution to revenues.

"It is certainly worth watching how quickly the VR market does take off, as the ecosystem will need time to develop 'killer apps' and VR content, which is more critical to drive the market than it is for hardware devices," the brokerage noted.

HTC shares closed down 2.78 percent at NT$77.0 (US$2.37) in Taipei Friday.

(By Jeffrey Wu) ENDITEM/Jules Quartly

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